Sustainability issues, or ‘responsible investment’ as it is also known to private equity firms, is having a significant impact on the performance of portfolio companies, their valuations and therefore, private equity investors and managers.
In our video, PwC Director Phil Case explains why it is so important, including the main drivers behind the responsible investment agenda for LPs and investors and when it should be considered during the deals cycle beyond the point of fundraising.
Investors are increasingly interested in environmental, social and governance (ESG) policies and programmes adopted by private equity firms, particularly at the point of fund-raising. They are, of course, keen to ensure that ESG risks are being well managed. But they are also focusing their investment strategy around more ‘sustainable’ propositions as they acknowledge this is now seen as a source of competitive advantage, as well as having significant effects on returns. Furthermore, regulatory developments, such as the Modern Slavery Act, are impacting private equity houses as they must acknowledge the legitimate interests of wider stakeholder groups that are concerned with transparency and disclosure.
ESG issues should be considered at key stages of the lifecycle of a portfolio company to maximise value protection and creation. Considerations include:
PwC provides a full range of sustainability-related services to address these issues. Our services include: